Monday March 13 2017

News Source: Global Disclosures

Focus: Position Limits (including MIFID II)

Type: General

Country: European Union




Following a joint FIA/EFET/GFMA/ISDA letter to ESMA in December 2016, the trade associations have jointly submitted draft Q&As to ESMA on position reporting under Art. 58 of MiFID II.

Reflecting their positions in the December letter, the draft Q&As propose a definition of end-client, clarify how positions of clients and clients of those clients should be reported and make suggestions how duplicative reporting could be avoided.

The questions include:

  • As there is no definition of “end client” in MiFID II/MiFIR, should references to “end client” in Article 58 MiFID II be interpreted in light of the Article 4(1)(9) MiFID II definition of “client”?
  • Where Article 58 MiFID II imposes a requirement on an entity to include the positions of its “clients and the clients of those clients, until the end client is reached”, should the entity’s report include its own positions, those of any entity to whom it provides investment or ancillary services (“Client X”), those of any entity to whom Client X provides investment or ancillary services, and so on down the chain?
  • Will there always be a “client” in respect of a position taken in a commodity derivative, emission allowance or derivative thereof that is traded on a trading venue or in an economically equivalent OTC contract (“EEOTC”)?
  • How should a firm fulfil its obligations under Article 58 MiFID II to report positions of its “clients and the clients of those clients”, when to do so would result in that firm being in breach of applicable non-EU laws and regulations, such as data protection and banking secrecy requirements?
  • Article 58(2) MiFID II requires an investment firm to report its trading venue positions (as well as its EEOTC positions) to the relevant NCA. The investment firm then reports the same trading venue positions to the trading venue under Article 58(3) MiFID II. In turn, the trading venue reports those same trading venue positions to the relevant NCA under Article 58(1). Given the level of duplicative reporting, will the reporting obligations be streamlined?

Click here for draft Q&As.

Click on the link above for further information.